NEC (6701) AI Stock Analysis

• Market Cap: $5.23T
• Dividend Yield: 0.7%
• Average Volume (3M): 4.26M
• Price to Earnings (P/E): 29.3
• Beta (1Y): 1.04
• Revenue Growth: -1.55%
• EPS Growth: 17.24%
• Country: JP
• Employees: 105,276
• Sector: Technology
• Sector Strength: 84
• Industry: Information Technology Services
• EPS (TTM): 77.80
• Shares Outstanding: 1,364,249,300
• 10 Day Avg. Volume: 4,133,130
• 30 Day Avg. Volume: 4,259,970
• PEG Ratio: -0.12
• Price to Book (P/B): 0.53
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 23.54
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $3,924.86
• Price Target Upside: -0.76% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 77 Outperform
• Price Target: ¥4,489.00 ▲(13.50%Upside)

NEC has a strong financial profile with robust earnings and cash flow, supported by positive earnings call guidance. However, valuation concerns and potential technical corrections due to overbought conditions slightly dampen the outlook. The company's efforts to improve profitability and strategic investments remain promising.

NEC Business Overview & Revenue Model

Company Description

NEC Corporation (6701) is a leading Japanese multinational corporation that specializes in providing information technology (IT) and network solutions. The company operates in various sectors including public services, enterprise, network services, and system platforms. NEC offers a wide range of products and services such as integrated IT and network technologies, telecommunications equipment, biometric authentication systems, and computing solutions, serving both government and private sector clients globally.

How the Company Makes Money

NEC makes money through a diverse revenue model primarily based on its IT and network solutions offerings. Key revenue streams include system integration services, where NEC designs and implements IT systems for clients in sectors like government, healthcare, and finance. Additionally, NEC generates revenue from the sale of telecommunications equipment and network infrastructure, including 5G technologies, to service providers and enterprise clients. The company also benefits from its significant investments in R&D, which drive innovation and enhance its product offerings. NEC has established partnerships with various enterprises and government bodies, which contribute to its earnings by expanding its market reach and solidifying its position as a trusted technology provider.

NEC Financial Statement Overview

Summary

NEC presents a strong financial profile with solid profitability, a stable balance sheet, and robust cash flow generation. Despite a slight dip in revenue growth, the company maintains efficient operations and prudent financial management. Moderate leverage and increasing capital expenditures are areas to monitor, but the overall financial health remains strong.

Income Statement

NEC has shown robust performance with improving profitability metrics. The gross profit margin stands at 30.99% for the latest year, indicating efficient cost management. The net profit margin has increased to 5.12%, reflecting a solid bottom line. Revenue growth has been positive over the years, although there was a slight dip in the latest year. Both EBIT and EBITDA margins indicate strong operational efficiency, with an EBIT margin of 8.27% and an EBITDA margin of 12.41%.

Balance Sheet

The balance sheet of NEC shows a healthy equity base with a debt-to-equity ratio of 0.34, suggesting moderate leverage. The return on equity is 8.97%, demonstrating effective use of equity financing. With an equity ratio of 45.23%, the company maintains a balanced capital structure. However, the increase in total debt over the years warrants cautious monitoring.

Cash Flow

NEC's cash flow statement reflects strong cash generation capabilities. The free cash flow has grown consistently, with a free cash flow to net income ratio of 1.24, highlighting robust cash earnings relative to net income. The operating cash flow to net income ratio of 1.97 further underscores healthy cash conversion from operations. The trajectory of free cash flow growth is positive, though capital expenditures have increased, which may impact future free cash flow if not managed.

Breakdown
Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
3.42T	3.48T	3.31T	3.01T	2.99T
	Gross Profit
1.06T	1.01T	958.25B	886.41B	861.18B
	EBIT
283.13B	192.19B	170.45B	132.53B	153.76B
	EBITDA
424.89B	375.71B	353.75B	313.06B	331.06B
	Net Income Common Stockholders
175.18B	149.52B	114.50B	141.28B	149.61B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
584.62B	476.49B	435.24B	448.33B	532.92B
	Total Assets
4.32T	4.23T	3.98T	3.76T	3.67T
	Total Debt
666.36B	548.64B	608.48B	597.38B	702.86B
	Net Debt
81.74B	72.15B	189.02B	166.60B	179.51B
	Total Liabilities
2.24T	2.14T	2.07T	1.98T	2.11T
	Stockholders Equity
1.95T	1.92T	1.62T	1.51T	1.31T
Cash Flow		Free Cash Flow
218.00B	171.46B	74.41B	76.41B	203.97B
	Operating Cash Flow
344.41B	271.23B	152.13B	147.52B	274.91B
	Investing Cash Flow
-242.17B	-76.02B	-49.59B	-63.38B	-122.49B
	Financing Cash Flow
7.03B	-155.51B	-122.79B	-189.62B	1.39B

NEC Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3955.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6701, the sentiment is Positive. The current price of 3955 is above the 20-day moving average (MA) of 3744.35, above the 50-day MA of 3420.85, and above the 200-day MA of 2891.35, indicating a bullish trend. The MACD of 119.37 indicates Positive momentum. The RSI at 74.11 is Negative, neither overbought nor oversold. The STOCH value of 66.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6701.

NEC Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6701	77 Outperform	$5.23T	29.28	8.97%	0.70%	-1.55%	17.24%
4307	75 Outperform	$3.23T	34.74	22.20%	1.06%	3.84%	19.26%
3626	74 Outperform	¥1.07T	21.36		1.52%	4.13%	5.65%
9719	74 Outperform	¥1.31T	29.10		1.69%	24.10%	11.27%
6702	74 Outperform	¥6.21T	27.92	11.70%	0.79%	-5.48%	-11.96%
Sector *	62 Neutral	$11.80B	10.31	-7.45%	2.91%	7.43%	-7.78%
9613	54 Neutral	¥5.60T	39.29	7.94%	0.67%	6.21%	6.41%

NEC Corporate Events

NEC Corporation Records Gains from Retirement Benefit Trust Assets

NEC Corporation announced the recognition of gains from the return of overfunded retirement benefit trust assets, amounting to 140,000 million yen, with a recorded gain of 52,700 million yen as extraordinary income for the fiscal year ending March 31, 2026. This financial maneuver is expected to have no impact on NEC’s consolidated financial results, as they adhere to International Financial Reporting Standards (IFRS), but it highlights the company’s strategic management of its financial resources.

The most recent analyst rating on (JP:6701) stock is a Sell with a Yen11700.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC Announces Corporate Restructuring to Enhance Competitiveness

NEC Corporation has announced a corporate restructuring involving a simplified absorption-type split, transferring shares of its subsidiaries, NEC Nexsolutions, Ltd. and NEC Networks & System Integration Corporation, to NESIC Holdings, Ltd., a wholly-owned subsidiary. This strategic move aims to enhance competitiveness, improve management efficiency, and facilitate rapid decision-making, aligning with NEC’s broader business reorganization strategy to strengthen its market position and operational capabilities.

The most recent analyst rating on (JP:6701) stock is a Sell with a Yen11700.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC Corporation Announces Increased Year-End Dividend and Share Split

NEC Corporation announced a decision by its Board of Directors to distribute dividends to shareholders, with a year-end dividend of 70 yen per share, totaling 18,683 million yen. This decision reflects an increase from the previous year’s dividend, highlighting NEC’s financial stability and commitment to rewarding its shareholders. The announcement also noted a share split effective April 1, 2025, which impacts the calculation of dividends for fiscal years 2024 and 2025. This move is likely to enhance NEC’s market position and shareholder value, while also adapting to market conditions and strategic growth plans.

NEC Corporation Reports Strong Profit Growth Despite Revenue Decline

NEC Corporation reported its consolidated financial results for the fiscal year ended March 31, 2025, showing a slight decline in revenue by 1.5% to 3,423,431 million JPY. However, the company achieved a significant increase in operating profit by 36.4% and net profit attributable to owners of the parent by 17.2%. The results indicate a strong operational performance despite a challenging market environment, with improvements in profitability and return on equity. The company also announced a share split effective April 1, 2025, which is expected to enhance liquidity and make shares more accessible to a broader range of investors.

NEC Corporation Transfers SME Business to Subsidiary for Strategic Reorganization

NEC Corporation has announced a strategic move to transfer its SME business to its wholly-owned subsidiary, NEC Nexsolutions, Ltd., through a simplified absorption-type corporate split. This reorganization aims to strengthen NEC’s business foundation in the digital transformation and social infrastructure domains, enhancing decision-making and operational efficiency.